HARARE – Last week, President Emmerson Mnangagwa officially launched the Empowerment Bank, amid pomp and fanfare.
The microbank has “been formed with the purpose of providing social and financial solutions to the financially excluded population with a greater focus on the youth”.
Capitalised to the tune of $12 million, among its activities, Empowerment Bank offers loans to youth-led businesses in agricultural projects, asset finance, guarantees and savings accounts, cutting across urban, peri-urban and rural Zimbabwe.
It offers various forms of “micro credit” including agricultural credit, rural credit, cooperative credit, order financing, invoice discounting and consumer credit.
Its products extend to school fees loans, special accounts for clubs, societies and associations seeking opportunities to save, invest and access flexible financial services as well as a savings accounts for farmers, agro traders (input suppliers, middlemen, agro retailer) and any other player in the agri-value chain.
We believe there is a huge market for the bank and that it should be able to create opportunities for previously disadvantaged groups so that they can play a meaningful role in the country’s economy.
It is, however, not going to be easy for the institution to make a mark considering that ever since Zimbabwe’s first indigenous bank burst onto the market in October 1993, most indigenous players have twisted in the wind.
Since the year 2000, there has been unprecedented bank failures because of poor corporate governance practices, huge non-performing loans, poor credit risk management, weak and ineffective regulatory and supervisory framework, an ailing economy and under capitalisation, among other things.
We totally agree that to change Zimbabwe’s fortunes, we need to empower youths to be change agents and, just as well, Empowerment Bank believes in the youths.
But then again, in 2011, government went into a partnership with local banks to create Kurera/Ukondla Youth Fund in a bid to ease the problem of unemployment and act as a stimulus to economic growth in the country.
Targeting youths aged between 18 and 35, the fund collapsed due to the youths’ failure to repay their loans.
Eighty-four percent of the youths who benefited from the fund defaulted on loan repayments and, as a result, it did little to improve the livelihood of the youths.
If the Empowerment Bank is to succeed, it must avoid past pitfall and go beyond dolling out funds just on the basis of the bankability of the projects on paper, to encompass monitoring the projects’ progression and ensuring funds are accessed by people with the relevant skills.